In a widely expected move, the target interest rate for
Federal funds was lowered twenty five basis points to 4.25% at today's
meeting of the Federal Open Market Committee.

Voting against the decision was Eric S. Rosengren who
preferred a 50 basis point cut.

The discount rate also was reduced twenty five basis points to
4.75%.

The Fed's rationale for today's move was that recent data
indicated a slowing in the rate of expansion due to "intensification of
the housing correction and some softening in business and consumer
spending." Moreover, strains on financial markets were viewed to have
increased.

Regarding price inflation, the FOMC judged "that some
inflation risks remain, and it will continue to monitor inflation
developments carefully."

For the complete text of the Fed's latest press release please
follow this link.

Other indicators of the current stance of U.S. monetary policy
portray one of general ease. -- Easy - The yield curve already has
steepened due to the decline in short term interest rates. This
liquidity measure is not, however, near the most liquid of stances
possible. -- Easy - The dollar's foreign exchange value is signaling an
easy posture, down by roughly one-third since its 2002 high. -- Easy -
Commodity prices are another signal of ease, nearly doubling since a
2002 low. -- Mixed - A mixed message is coming from the money supply
measures. Growth in M2 has accelerated to a not too fast 6.3% rate of
growth while growth in the monetary base has drifted lower to 2.2%. --
Tight - While down, the level of the "real" Fed funds rate still is
high.